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Tracker, Financial Services Regulation & Compliance - Banking

Domestic

Reminder - revised Corporate Governance Code effective as of 1 January 2015
On 1 January 2015, the Central Bank of Ireland's revised Corporate Governance Code for Credit Institutions and Insurance Undertakings 2013 (the 2013 Code) came into effect, replacing the prior 2010 Code. As a reminder of its key impacts and content, a link to our January 2014 client bulletin is included here.

Department of Finance publishes Dataset on mortgage arrears and restructures for November 2014
This Dataset was published on 15 January. It requested that the six main banks operating in Ireland, namely AIB, Bank of Ireland, PTSB, ACC, KBC Ireland and Ulster Bank would submit their datasets in respect of residential mortgage arrears and restructures. The dataset relates both to principal dwelling houses (PDH) and buy-to-let dwellings (BTLD). The total mortgage accounts in arrears in respect of both PDH and BTLD are 91,963 and 31,362 respectively.

Central Bank of Ireland (CBI) announces new regulations on residential mortgage lending
These new regulations were announced on 27 January. These regulations will apply proportionate limits to mortgage lending by regulated financial service providers in the Irish market. They will introduce proportionate limits for loan to value and loan to income measurements for both private dwelling house and buy to let mortgages. The objective of these new regulations is to reduce the risk of bank credit and house price spirals from developing in the future.The Department of Finance has published a press release stating that the regulations will be laid before the Houses of the Oireachtas.

Central Bank of Ireland (CBI) publishes passporting notification forms for credit institutions
These forms were published on the 'library' section of the CBI website on the 20 January. There are a number of different forms, namely:

Branch passporting notification form for Less Significant Institutions (LSIs);

Branch passporting notification form for Significant Institutions (SIs) passporting within the SSM;

Branch passporting notification form for SIs passporting outside of the SSM; and

Passporting services notification form for SIs and LSIs.

EU & International

Lithuania joins the euro area on 1 January
Lithuania having joined the euro area on 1 January has brought the number of Member States using single European currency to 19. Lietuvos bankas, the national central bank of Lithuania has become a member of the Euro system, which now consists of the European Central Bank (ECB) and 19 national central banks. Lithuania also joined the Single Supervisory Mechanism. As a result 3 Lithuanian banks (namely SEB bankas, Swedbank and DNV bankas) now fall under the direct supervision of the ECB.

European Banking Authority (EBA) launches public consultation on draft Implementing Technical Standards (ITS) in respect of the Banking Resolution and Recovery Directive (BRRD)
This public consultation period begun on 14 January and will run until 14 April 2015, with a public hearing taking place on 27 February. The proposed ITS sets out the procedure that should be adhered to when resolution authorities require information about an institution for the purposes of drawing up a resolution plan.

European Banking Authority (EBA) publishes impact assessment report for liquidity coverage ratio (LCR) requirements under Capital Requirement Directive IV (CRD IV)
This assessment is based on data collected by 322 European banks, which make up two thirds of the total banking assets of the EU. The analysis shows that there has been an increased level of compliance on the part of EU institutions with the LCR requirements. It is not considered likely that these LCR requirements will have any material detrimental impact on the business and risk profile of such institutions.

European Central Bank (ECB) announces expanded asset purchase programme
This programme will begin in March 2015 and is expected to continue until such time as the EU is on the 'path of inflation', according to ECB President Mario Draghi. Under the programme, the ECB will buy securities both in public and private sectors, at a cost of €60 billion per month. The ECB will buy bonds issued by euro area central governments, agencies and European institutions in the secondary market against central bank money, which the institutions that sold the securities can use to buy other assets and extend credit to the real economy.

Basel Committee on Banking Supervision (Basel Committee) has issued the final standard for the updated Pillar 3 disclosure requirements
This final standard has the aim of improving transparency of internal model based approaches that banks use to calculate minimum regulatory capital requirements. This updated standard builds upon the Basel Committee's June 2014 consultation paper. It brings about the following key changes:

streamlining the requirements related to disclosure of credit risk exposures and credit risk mitigation techniques; and

clarifying and streamlining the disclosure requirements for securitisation exposures.

The requirements will come into effect by the end of 2016.

Basel Committee on Banking Supervision (Basel Committee) publishes its work programme for 2015 and 2016
The work programme summarises the policy initiatives the Basel Committee is expected to undertake as it continues to propose and finalize the remaining elements of its Basel III regulatory reform agenda. It centres around four key areas namely, policy development, ensuring an adequate balance between simplicity, comparability and risk sensitivity across regulatory framework, monitoring and assessing implementation of Basel framework and improving effectiveness of supervision.